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Financial Discipline, Taxes Vital to Prosperity

Increasing the nation's ability to create wealth is a top priority for the government, Ali Tayebnia, the minister of economic affairs and finance said Tuesday.

Tayebnia, who was addressing a meeting of anti-corruption agencies, underscored that increasing economic transparency and financial discipline as well as improving financial supervision systems are among the main targets of his ministry.

"The economy ministry, along with its affiliated organizations can play a key role in the process of enforcing financial discipline," he said.

"It is necessary to find the best way to reduce costs and collect revenues including taxes," Tayebnia stated, referring to the government's plans to deal with budget deficit caused by the reduction in oil prices. The minister added that tax revenues are majorly addressed in the resistance economy – a set of guidelines carved out by Iran's Leader to lessen the impact of US-led sanctions and stimulate economic growth.

**Alternative Revenue Generation

Under the current circumstances -- when the reduction of oil prices has resulted in a drop in government earnings -- the Rouhani administration seriously seeks to lessen its reliance on oil revenues by increasing its dependence on tax revenues, Tayebnia said.

He asserted that the role of the economy ministry has become more significant now in collecting taxes; however, the ministry is at the same time focusing on dealing with the issue of financial corruption, which needs to be addressed more seriously than ever.

Meanwhile, Tayebnia said that oil revenues have always been the source of rent and financial corruption. The government has been obliged to sell oil and the subsequent distribution of rent in the national economy has caused violations.

"It is essential to eliminate rent-seeking opportunities in the country", he said.

***Tax Reforms

The minister also referred to the vital role of Iranian National Tax Administration (INTA) in collecting government's tax revenues and also in dealing with tax violations.

The comprehensive tax plan is under investigation in the tax administration and will come into force by the end of the next year (March 2016). The full-blown program is expected to make all taxpayers' information transparent, he noted.

Starting from March 2016, tax evasion will be managed and supervised through the introduction of a comprehensive software. The Comprehensive Tax System Plan aims to increase tax revenues, simplify tax calculation method, introduce double taxation, organize the tax system, regulate tax exemptions and prevent tax evasion. The program is also aimed at initiating a short-term risk management project. Using the full-blown taxation software, the government will replace oil revenues with taxes. Taxpayers will be categorized into three groups of high, middle, and low risk-takers, and those included in the high-risk group would be inquired regarding the authenticity of their tax declaration and their business activities.

Tayebnia then underlined the need for increasing penalties for tax evaders and said that if the process of investigating the tax evaders and their cases – until reaching a verdict – takes too long the government is likely to lose its authority.